Since introducing the first index fund for individual investors in the United States in 1976, Vanguard has developed a reputation for tight index tracking, rigorous risk controls and low costs. Today, millions of investors around the world rely on us for our high-quality index investments.
Our index ETFs are designed to work as part of a core indexing strategy that targets major asset classes.
Index products and the benchmarks they seek to track have proliferated. But index providers' methodologies vary, so two benchmarks tracking the same market segment may deliver very different results. Selecting an appropriate benchmark is crucial to providing a best-in-class index ETF.
Many index providers use benchmark construction best practices that Vanguard has promoted for years. We believe equity and fixed income benchmarks should:
Additionally, equity benchmarks should use multiple criteria to categorize growth versus value stocks and use buffer zones so that market-capitalization divisions can overlap, with no hard cut-off points, to limit unnecessary turnover.
Using best practices to construct benchmarks can deliver benefits to investors, including:
This material is for informational purposes only. This material is not intended to be relied upon as research, investment, or tax advice and is not an implied or express recommendation, offer or solicitation to buy or sell any security or to adopt any particular investment or portfolio strategy. Any views and opinions expressed do not take into account the particular investment objectives, needs, restrictions and circumstances of a specific investor and, thus, should not be used as the basis of any specific investment recommendation. Please consult your financial and/or tax advisor for financial and/or tax information applicable to your specific situation.
This material does not constitute an offer or solicitation and may not be treated as an offer or solicitation in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so.
In this material, references to "Vanguard" are provided for convenience only and may refer to, where applicable, only The Vanguard Group, Inc., and/or may include its affiliates, including Vanguard Investments Canada Inc.
All investments, including those that seek to track indexes, are subject to risk, including the possible loss of principal. Diversification does not ensure a profit or protect against a loss in a declining market. While ETFs are designed to be as diversified as the original indexes they seek to track and can provide greater diversification than an individual investor may achieve independently, any given ETF may not be a diversified investment.